Let’s look 3 - ACCT20100 · • Phillips‐Van Heusen receives payment from Macy’s for the...

Let’s look at E3‐3

• A popular ski magazine company receives a total of $11,980 today from subscribers.  The subscriptions begin in the next fiscal year.  Answer from the perspective of the magazine company:

• What do you do with each edition of the magazine that is sent out?

Account Name Debit Credit

Cash $11,980

Unearned Subscription Revenue $11,980

Cash Flow Category?

• On September 1, 2013, a bank lends $1,200 to a company; the note principal and $144 annual interest are due in one year (1,200 X 12%).  Answer from the Bank’s perspective.

• NOW:

• In 1 year (assuming no other transactions are recorded?

Account Name Debit Credit

Note Receivable $1,200

Cash $1,200

Cash flow Category?

• Fucillo Hyundai, Inc, sells a truck with a list, or sticker, price of $20,050 for $18,050 cash.

Account Name Debit Credit

Cash $18,050

Sales Revenue $18,050

Cash Flow Category?

• Macy’s Department Store orders 1,000 men’s shirts for $15 each for future delivery from Phillips‐Van Heusen Corporation.  The terms require full payment within 30 days of delivery.  Answer from Phillips‐Van Heusen’s standpoint.Account Name Debit Credit

No Entry

• Phillips‐Van Heusen completes production of the shirts described in part d and delivers the order (answer from Phillips‐Van Heusen perspective)

Account Name Debit Credit

Accounts Receivable $15,000

Sales Revenue $15,000

Cash Flow Category?

• Phillips‐Van Heusen receives payment from Macy’s for the order described in part d.  Answer from the perspective of Phillips‐Van Heusen.

Account Name Debit Credit

Cash $15,000

Accounts Receivable $15,000

Cash Flow Category?

• A customer purchases a ticket from American Airlines for $610 cash to travel the following January.  Answer from American Airlines perspective.

Account Name Debit Credit

Cash $610

Unearned Airfare Revenue $610

Cash Flow Category?

• Ford Motor Company issues $20 million in new common stock

Account Name Debit Credit

Cash $20,000,000

Contributed Capital $20,000,000

Cash Flow Category?

• Penn State University receives $18,300,000 cash for 80,000 five‐game season football tickets.

Account Name Debit Credit

Cash $18,300,000

Unearned Football Ticket Revenue $18,300,000

Cash Flow Category?

• Penn State plays the first football game described in the previous transaction.

Account Name Debit Credit

Unearned Football Ticket Revenue $3,660,000

Football Ticket Revenue $3,660,000

Cash Flow Category?

• Precision Construction Company signs a contract with a customer for the construction of a new $1,500,000 warehouse.  At the signing, Precision receives a check for $150,000 as a deposit on the future construction project.  Answer from the perspective of Precision.

Account Name Debit Credit

Cash $150,000

Unearned Construction Revenue $150,000

Cash Flow Category?

• A customer orders and receives 10 personal computers from Dell; the customer promises to pay $18,400 within three months.  Answer from Dell’s standpoint.  What about cost info?

Account Name Debit Credit

Accounts Receivable $18,400

Sales Revenue $18,400

Cash Flow Category?

• Sears, a retail store, sells a $100 lamp to a customer who charges the sale on his store credit card.  Answer from Sear’s perspective.

Account Name Debit Credit

Accounts Receivable $100

Sales Revenue $100

Cash Flow Category?

• E3‐4

McGraw‐Hill Publishing Company uses $2,754 worth of electricity and natural gas in its headquarters building for which it has not yet been billed.

Note:  Expense is incurred when utilities are used and can be recorded when amount is known.

Account Name Debit Credit

Utilities Expense $2,754

Utilities Payable $2,754

At the beginning of January, Turner Construction Company pays $846 for magazine advertising to run in monthly publications of the first three months of the year.

Account Name Debit Credit

Prepaid Advertising $846

Cash $846

Dell pays its computer service technicians $379,500 in salaries for two weeks ended January 7.

• ASSUME:  No Salaries Payable has been previously recorded.

• If they recorded Salaries Expense/Salaries Payable properly in December

Account Name Debit Credit

Salaries Expense $379,500

Cash $379,500

Account Name Debit Credit

Salaries Expense $189,750

Salaries Payable $189,750

Cash $379,500

The University of Florida orders 60,000 season football tickets from its printer and pays $7,610 in advance for the custom printing.  The first game will be paid in September.  Answer from the University's standpoint.

Account Name Debit Credit

Prepaid Tickets $7,610

Cash $7,610

The campus bookstore receives 500 accounting texts at a cost of $89 each.  The terms indicate that payment is due within 30 days of delivery.

Account Name Debit Credit

Inventory $44,500

Accounts payable $44,500

During the last week of January, the campus bookstore sold 450 accounting texts received in part e at a sales price of $150 each.

Assume cost data from part e (cost of $89 per book)

Account Name Debit Credit

Cash $67,500

Sales Revenue $67,500

Account Name Debit Credit

Cost of Goods Sold $40,050

Inventory $40,050

Fucillo Hyundai, Inc. pays its salespersons $13,200 in commissions related to December automobile sales.

Assume:  Company had previously recorded commissions payable.

Account Name Debit Credit

Commissions Payable $13,200

Cash $13,200

On January 31, Fucillo Hyundai, Inc. determines that it will pay its salespersons $14,470 in commissions related to January sales.  The payment will be made in early February.  Answer from Fucillo’s perspective.Account Name Debit Credit

Commissions Expense $14,470

Commissions Payable $14,470

A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment was made on that day.

Account Name Debit Credit

Equipment $12,750

Cash $12,750

Carousel Center Mall had janitorial supplies costing $4,000 in storage.  An additional $2,600 worth of supplies was purchased during January.  At the end of January, $1,410 worth of janitorial supplies remained in storage.

Assume:  Purchase of supplies was properly recorded, just recording the supplies used.

Account Name Debit Credit

Supplies Expense $5,190

Supplies $5,190

An Iowa State University employee works eight hours, at $13 per hour, on January 31; however, payday is not until February 3.  Answer from the perspective of the university.Account Name Debit Credit

Wages Expense $104

Wages Payable $104

Wang Company paid $3,600 for a fire insurance policy on January 1.  The policy covers 12 months beginning January 1.Account Name Debit Credit

Prepaid Insurance $3,600

Cash $3,600

Darrius Incorporated has its delivery van repaired in January for $300 and charges the amount on account.

Account Name Debit Credit

Repairs & Maintenance Expense $300

Accounts Payable (Maint. Payable) $300

Hass Company, a farm equipment company, receives its phone bill at the end of January for $202 for January calls.  The bill has not been paid to date.

Account Name Debit Credit

Telephone Expense $202

Accounts Payable $202

Martin Company receives and pays in January a $1,285 invoice (bill) from a consulting firm for services received in January.

Account Name Debit Credit

Consulting Expense $1,285

Cash $1,285

Parillo’s Taxi Company pays a $595 invoice from a consulting firm for services received and recorded in December.Account Name Debit Credit

Accounts payable $595

Cash $595

Phillips‐Van Heusen Corporation completes production of 500 men’s shirts ordered by Macy’s Department Store at a cost of $10 each and delivers the order.

Note:  No information was provided about sales information.  Would have been Accounts Receivable and Sales Revenue.

Account Name Debit Credit

Cost of Goods Sold $5,000

Inventory $5,000